Lewis Group Limited · JSE:LEW
Lewis — FY2020 Earnings Presentation
24 slides from Lewis's earnings presentation, August 2020
Slide 1: Audited Financial Results for the Year Ended 31 March 2020
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 20 20
Slide 2: Agenda
Agenda 01 02 Debtor analysis Highlights Debtor performance Impact of Covid-19 Gross debtor analysis Review of 2020 Operational review 2 03 04 Covid-19 response Financial results Income statement and Q1 trading update 2021 Segmental analysis Analysis of costs Balance sheet overview
Slide 3: Highlights
Impact of Covid-19 04 01 Highlights Review of 2020 Operational review 06 07 3 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2020 3
Slide 4: Impact of Covid-19
Impact of Covid-19 Pre Covid-19 31 March 2020 11 months 12 months MERCHANDISE SALES 6.9% 4.7% • Lost sales under lockdown of ±R80 million 4 COLLECTIONS RATES 77.3% 74.5% • Lost collections under lockdown of ±R180 million SATISFACTORY PAID CUSTOMERS AS A % OF TOTAL CUSTOMERS 71.2% 70.5% (2019: 67.1%)
Slide 5: Impact of COVID-19
Impact of COVID-19 MARCH DEBTORS IMPAIRMENT LEASES IMPAIRMENT TRADING PERIOD PROVISION – IFRS 9 PROVISION – IFRS 16 • Crucial month end trading period Impairment provision – overall increase • Impairment charge of R26.6m as a impacted by lockdown of R210.9m as follows: result of possible future impa
Slide 6: Review of 2020
Review of 2020 Revenue 5.2% Merchandise sales 4.7% Gross profit margin at 41.0% 6 Operating profit down 42.7% Cash generated from operations at R636m HEPS down 30.8% to 260 cents per share Total dividend at 185 cents per share LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2020 6
Slide 7: Operational review
Operational review Solid trading and operational performance for the year before COVID-19 Resilient business model supported by strong balance sheet and cash generation Trading out of 794 store outlets (2019: 784 stores) 7 125 stores outside SA (2019:120 stores) 223 Small format Lewis stores (46
Slide 8: Operational review
Operational review Credit application decline rate: 37.5% (2019: 37.4%) Credit sales mix: 56.9% (2019: 57.9%) Other revenue: up by 5.8% 8 Expense control High focus area Ahead of management’s guided range of 6% - 8% Share repurchase programme 11.9 million shares repurchased since October 2016
Slide 9: Debtor analysis
02 Debtor analysis Debtor performance Gross debtor analysis 10 11 9 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2020 9
Slide 10: Debtor performance
Debtor performance 2020 2019 Collections (Rm) Collections from instalment sales 4 052 4 041 Actual collections achieved As a % of one contract instalment per customer per month 74.5% 76.3% 10 Contractual arrears (Rm) 2 112 2 129 % of debtors at gross carrying value 36.7% 38.5% Debtor Costs (Rm) Debt
Slide 11: Gross debtor analysis
Gross debtor analysis Instalments in arrears Number of Gross Impairment Impairment Total customers carrying value provision provision arrears 1 2 3 >3 Customer grouping Total R’000 R’000 % R’000 R’000 R’000 R’000 R’000 Satisfactory paid 2020 420 399 3 397 212 728 839 21.5 615 331 203 768 127 077 89
Slide 12: Financial results
Income statement 13 Segmental analysis 14 03 Financial results Analysis of costs Balance sheet overview Key ratios 15 16 17 12 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2020 12
Slide 13: Income statement
Income statement 2020 2019 % Revenue (Rm) 6 453 6 137 5.2 Merchandise sales (Rm) 3 686 3 520 4.7 Gross profit margin (%) 41. 0 41. 2 13 Operating profit (Rm) 253 443 (42.7) Operating profit margin(%) - based on revenue 3.9 7.2 Operating profit margin(%) - based on sales 6.9 12.6 Attributable earning
Slide 14: Segmental analysis
Segmental analysis Group Traditional Cash Revenue (Rm) 6 453 5 913 540 Merchandise sales (Rm) 3 685 3 155 530 Operating profit (Rm) 254 210 44 14 Operating margin: 2020 (%) 3.9 3.5 8.1 Operating margin: 2019 (%) 7.2 7.1 8.3 Number of stores 2020 794 753 41 Number of stores 2019 784 748 36 LEWIS GROU
Slide 15: Analysis of costs (excluding debtor costs)
Analysis of costs (excluding debtor costs) 2020 2019 Rm Rm % Employment costs 1 214 1 150 5.6 Admin and IT 360 348 3.4 Marketing 299 298 0.3 15 Occupancy costs 144 445 (67.6)* Transport and travel 273 242 12.8 Depreciation, amortisation and impairment 376 79 375.9* Other operating costs 350 331 5.7
Slide 16: Balance sheet overview
Balance sheet overview 2020 2019 Rm Rm Property, plant, equipment and intangible assets 632 609 Right-of-use assets 694 - Inventory 741 665 Trade and other receivables 3 326 3 316 Cash on hand 1 193 205 16 Other assets 802 994 Total assets 7 388 5 789 Shareholders’ equity and reserves 4 709 4 876 Tr
Slide 17: Key ratios
Key ratios 2020 2019 % HEPS (cents) 260.2 376.2 (30.8) ROE – after tax (%) 3.8 6.4 ROCE – after tax (%) 3.7 6.5 17 ROA – before tax (%) 4.8 8.5 Gearing ratio –pre IFRS 16 (%) (5.6) (4.2) Gearing ratio –post IFRS 16 (%) 12.0 - Total dividend declared (cents) 185 234 (20.9) LEWIS GROUP LIMITED AUDITED
Slide 18: Covid-19 Response and Q1 Trading update 2021
Covid-19 Response and 04 Q1 Trading update 2021 18 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2020 18
Slide 19: Response to COVID-19
Response to COVID-19 The health and safety of our employees and customers has been paramount throughout the COVID-19 pandemic while ensuring business continuity for the benefit of our stakeholders. EMPLOYEES CUSTOMERS SUPPLIERS SHAREHOLDERS 19 • Work from home • Alternative payment • Honouring merch
Slide 20: Trading update – Q1
Trading update – Q1 Covid-19 had a material impact on trading performance in April and May 2020 No sales recorded until 18 May 2020, when full merchandise range became available on e-commerce platforms All South African stores reopened their doors on 1 June 2020 20 Collection rates – 59.9% (
Slide 21: Targets and outlook
05 Targets and outlook 21 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2020 21
Slide 22: Financial and operating targets
Financial and operating targets The expected impact of Covid-19 has been taken into account when setting targets. Owing to the uncertainty posed by Covid-19, management will review these targets regularly and communicate changes at results presentations. Targets Actual Medium- % 2020 2020 2021 term
Slide 23: Outlook
Outlook Despite Covid-19, strategy remains unchanged Short term operating plans continuously adapted in response to Covid-19 specific challenges and opportunities Trading conditions expected to remain challenging due to rising levels of 23 unemployment and contraction in consumer spending Co
Slide 24: Questions
06 Questions 24 LEWIS GROUP LIMITED AUDITED FINANCIAL RESULTS 2020 24